1.EPIC Enterprises is considering increasing the price of its batteries, currently at $15, by 30 per cent. EPIC's current revenue is $32,000 a month, and the PED for its batteries is estimated to be at -1.7.

a.Calculate the effect of the price change on EPIC's revenue.

b.EPIC now considers increasing the advertising budget to restore its sales revenue to the previous level. EPIC is currently spending $1,650 a month on advertising and estimates its AED to be 1.5. What will its new budget have to be?

c.What can you say about what will happen to profit in both (a) an (b) compared with the original level of profit?